In People Risk Management, Keith Blacker and Patrick McConnell provide insight and practical suggestions about how to manage people-related risks at large commercial firms. Due to their size and complexity, large companies are more prone to disastrous outcomes, such as those experienced by BP, Enron, and Lehman Brothers. The authors offer practical tools, real-world examples, and best-practice guidance about how to implement effective people risk management across an organization and thereby improve decision-making processes.

From bad business decisions to illegal activity, people risk — the risk that people will deviate from an organization’s rules and procedures in a way that damages profits and reputations — presents a growing threat to increasingly complex and global businesses. Leaders should be aware of the following aspects of people risk:

Individuals and groups make bad decisions when they fail to consider all of the facts. A bad decision can benefit a firm, and a good decision can be morally dubious.

Rather than using rational analyses to make decisions, people are subject to cognitive biases or blind spots, such as overconfidence or groupthink.

A company’s culture has a significant effect on people risk management. The culture is influenced from the top down.

A company can use a decision checklist as well as pre- and post-mortems to help improve decision-making throughout the organization.

Organizations should create personalized codes of conduct to help individuals take personal responsibility and improve decision-making processes.